COST OF CAPITAL AND CLIMATE RISK IN THE INDONESIAN BONDS MARKET

Maulana Harris Muhajir ()
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Maulana Harris Muhajir: NEOMA Business School, France

Bulletin of Monetary Economics and Banking, 2024, vol. 27, issue Spesial Issue, 75-94

Abstract: This study analyzes the impact of climate risk, cost of capital, and macroeconomic variables on the Indonesian bond market, focusing on non- environmental and social (ESG)-aware and ESG-aware bonds. The findings reveal the growing significance of ESG factors in the Indonesian bond market, with climate risk negatively impacting ESG-aware bond yields. Our study suggests that policymakers should prioritize initiatives that incentivize green investments and make the industry more aware of ESG factors. Overall, this study provides valuable insights for policymakers and investors on navigating the Indonesian bond market and implementing strategies that align with ESG values.

Keywords: Cost of capital; Green investment; Climate risk; Tax incentive (search for similar items in EconPapers)
JEL-codes: D24 G12 G28 Q5 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:idn:journl:v:27:y:2024:i:sif:p:75-94

DOI: 10.59091/2460-9196.2163

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